Commentary: Public infrastructure in U.S. stronger because of private freight railroads

Saturday

Aug 12, 2017 at 9:00 AM

By Ian Jefferies

Despite an endless list of public policies to tackle in Washington, elected leaders on both sides of the aisle continue to call for plans to improve our interconnected infrastructure network of roads, bridges, waterways, electric systems and the like. The reasons are obvious, given that the American Society of Civil Engineers recently graded, like a school report card, U.S. infrastructure a “D-plus” across 16 categories.

Ohio was barely better when last graded alone, a “C-minus” status in 2013.

Rail, which includes private freight and passenger carriers, received the highest grade — a “B-plus.” This is important for two reasons: it shows that high-performing infrastructure requires large, sustained investments — freight railroads have spent more than $100 billion since 2013 — and that the presence of railroads — which take trucks and freight off of public infrastructure — must be valued and prioritized in this discussion.

While any infrastructure package will be complicated, ensuring the viability of this industry that serves almost every industry and lessens deterioration of roads and bridges, is a common sense place to start. It would have lasting impacts in Ohio — a manufacturing powerhouse — and beyond.

Today’s railroads, following the near death of the sector due to government intrusion into pricing and routing practices, are as safe, efficient and reliable as ever, a direct result of landmark legislation that established today’s modern regulatory framework. In 1980, Congress passed the Staggers Act, a seminal law that allowed for greater industry independence. The structure protects railroad customers against unreasonable railroad actions while allowing railroads and their customers to work together without undue government interference.

The freight rail industry today supports $1.5 million jobs nationally, $274 billion in economic activity and $33 billion in tax revenues. All of this, however, hinges on continued private investment. And this investment, more than $635 billion since 1980, rests largely on public policies from elected officials, including steady leadership from Congressmen like Bob Gibbs of Ohio, who serves on the Transportation and Infrastructure Committee.

Most immediately, Washington regulators should retract numerous proceedings to re-regulate freight rail, especially a proposed measure called forced access, which would allow the government to order one rail company to use its own privately owned facilities on behalf of a competitor. Because rail routing is complex, further injecting bureaucrats into the private sector would slow rail traffic, push freight on to overburdened highways and in turn reduce dollars available for investment. Less investment could hurt businesses that rely on railroads, hence why economic re-regulation of railroads is widely opposed across the political spectrum.

More broadly, lawmakers should forge sustainable funding solutions to the insolvent Highway Trust Fund, the pool of money funded almost by the gas tax and which is used to fund federal and state transportation infrastructure projects. Because the gas tax does not cover operating expenses, and because commercial users such as trucks do not pay for their proportional use of roads, taxpayers have subsidized the fund with $143 billion since 2008. The traditional connection in which users of the highway system pay for that infrastructure should not be broken, and policymakers should consider measures such as a vehicle miles traveled fee to instill a truly equitable system.

Last, we must make our tax code, the highest in the industrial world, simpler and more competitive while also streamlining government processes that will similarly unshackle the business community. By generating policies that focus more on desired outcomes than prescriptive steps and cutting red tape in the permitting process, long-delayed infrastructure projects may finally come to fruition. Not by eradicating regulation, but by instilling good government principles — transparency and complete and sound science — railroads, trucks, barges and other transportation stakeholders would gain efficiencies that make room for greater innovation and investment.

Fixing U.S. infrastructure, particularly roads and bridges, is no small task. But by spurring private investments and ensuring the strength of freight rail, a complicated picture is at least a bit clearer.

Jefferies is senior vice president-government affairs for the Association of American Railroads.